Media Buying Briefing: Reddit expands outreach to independent agencies as its ad revenue rises

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Popular but under-the-radar social platform Reddit (that is, compared to the Instagrams and TikToks of the world) is making yet another push to woo advertisers — smartly by going through their media agencies.

Having reached partnership agreements with all the major holding companies, the current push is to bring more independent media agencies into the fold as well. This all comes as Reddit works to make its ad offerings more sophisticated and level with its social competition — one of which, Twitter, is struggling to keep its ad revenue robust. 

Reddit last week announced partnerships with Horizon Media, PMG and Wpromote, as well as the expansion of an existing partnership with performance specialist Tinuiti from a year ago. According to Reddit, Tinuiti tripled its clients’ ad spend on the platform over the last year. Among its clients are e.l.f. cosmetics, Unilever Health & Wellbeing Collective and Pacsun.

Specifically, the media agencies will have the option to take advantage of advertiser incentives, get early access to new ad product tests as well as enhanced measurement tools. They will also have better access to KarmaLab, Reddit’s in-house creative agency to help build campaigns for disruptor and challenger brands.

“We’re laser focused on both growing and diversifying our advertising base,” said Evan Wolf, Reddit’s head of mid-market and SMB sales, North America. “These independent agencies are cutting-edge: they’re nimble, they’re future-looking, they’re innovative and they work with some of the coolest and best brands in the world.” 

“The marriage of bespoke insights and continued ad experience enhancements can come together to bring to life a more full-funnel experience on the platform,” said Carly Carson, head of integrated media at PMG, who noted the agency is using its Alli marketing intelligence platform to deepen API integrations with Reddit.

“Today, I think the capabilities are almost to par with the rest of the platforms in our industry,” said Avi Ben-Zvi, vp of paid social with Tinuiti. “There are a couple of things that they’re still rolling out here and there, but it’s changed really fast.” Ben-Zvi noted in particular reserve buys with takeovers, compelling video units, carousels along with newer dynamic product ads. 

Reddit’s Wolf pointed to Tinuiti client e.l.f. cosmetics, which found that going past obvious channels on the platform such as r/beauty yielded better results. “They’re finding customers in places like r/girlgamers, which is actually very relevant when you unpack insights into how people use the platform,” he said. “Our ability to show and share those insights with advertisers is helping them find and grow their customer base. And that’s the type of work that doesn’t end when the campaign ends.”

“it’s now getting to the level where it’s comparable” with other social platforms given its longevity in the social space, added Ben-Zvi. “The question is now, can we scale that capability? And can we measure properly to prove out that impact as well?”

Darren D’Altorio, vp of paid social at Wpromote, said his agency is getting three levels of value from the partnership: education, performance validation and measurement, and creative insights from KarmaLab. The creative side is especially important since D’Altorio noted that Reddit’s communities are especially sensitive to advertising that doesn’t talk to them on their levels. 

“If you’re going to be on Reddit, you have to come to the table with a thoughtful approach,” said D’Altorio. “The Reddit community values comedy, sarcasm, certain aspects of self deprecation, brutal honesty. There are some really cool, creative gateways to have some fun with your brand on Reddit, which might be a departure from how you show up on other platforms.” 

According to Statista, Reddit grew ad revenue 39% percent to $424 million in 2022 over ‘21, with a similar sized bump expected for 2023. Reddit declined to comment on those revenue estimates, citing a quiet period prior to going public sometime later this year.

Might Reddit pick up some of the ad-sales steam being let out of Twitter, whose latest global ad revenue forecast got slashed by 27.9% from $4.14 billion in 2022 to $2.98 billion by the end of 2023? That’s what Insider Intelligence forecasts — the platform’s second consecutive downgrade following Tesla CEO Elon Musk’s takeover in 2022.

In Q3 2022, after the acquisition began in April, analysts downgraded the outlook for Twitter’s ad business by 30%. In the U.S., Insider Intelligence noted an ad revenue decline of 28.6% to $1.68 billion in 2023, compared to $2.36 billion in 2022. Twitter’s share of the U.S. digital ad market is expected to drop from 1% to 0.6%, according to the report.

Jasmine Enberg, principal analyst in social media at Insider Intelligence, said this latest downgrade comes in part because of declining trust from advertisers since Musk took over the company. Enberg added that ultimately Twitter’s changes to its subscription service, Blue, and other efforts to bring back major advertisers have not worked to boost ad revenue – and won’t succeed so long as Musk is boss of the social platform.

“Twitter needs to unravel Musk’s personal brand from the company’s corporate image to regain advertiser trust and bring back ad dollars,” Enberg said.

Ben-Zvi noted that Reddit and Twitter are more alike than Reddit is to, say, TikTok or Instagram, so if the proverbial bloom is off the rose at Twitter, ostensibly Reddit could benefit. But he added that Tinuiti clients went from spending very little on Twitter to zero at this point, so there’s not been a huge migration from one to the other. 

Enberg agreed budgets aren’t shifting radically away from Twitter since it hasn’t historically been a huge social destination for advertisers. Additionally, she said that some ad dollars will be lost from the market this year due to businesses making cuts during a time of economic uncertainty.

“Many of the reallocated Twitter ad dollars will go to Meta, LinkedIn, and Pinterest, but it would be a stretch to call them beneficiaries,” she said.

Color by numbers

For now, it would seem short-form and video content is still experiencing the most engagement across social media usage for U.S. adults 18 and up in 2023, according to recent research from Insider Intelligence. TikTok is still winning the time spent competition by far. — AS

Based on the average time spent per day by U.S. adults, the top social media platforms are: 

—TikTok: 55.8 minutes

—YouTube: 47.5 minutes

—Twitter: 34.1 minutes

—Snap: 30.8 minutes

—Instagram: 30.6 minutes

—Facebook: 30.2 minutes

—Reddit: 23.6 minutes

Takeoff & landing

  • Independent media analyst Brian Wieser researched the top 25 independent agencies’ revenue flow (including The Brandtech Group, Dept, Plus Company, Horizon Media, Bounteous, VaynerMedia, PMG, Tinuiti and others), and found they’re growing more slowly after two years of explosive growth. Following an average 14% growth in 2022, which started higher and ended up lower, Q1 2023 growth was a much humbler 4%. Interestingly, Wieser noted that their slowing growth mirrors the slowed growth of the giant platforms — which makes sense since most of the independents lean heavily toward digital media.
  • Auto giant Ford moved most of its AOR social media account, known as Ford Blue, out of VaynerMedia to a combination of WPP agencies (reported to be VMLY&R and Mindshare) and Wieden + Kennedy. Vayner, which had just won the business a year ago, will keep Ford’s commercial and government social duties. 
  • Stagwell media agency Assembly promoted Valerie Davis from president to CEO of North America, citing a 21% increase in new business revenue over 2021.  Other promotions and hires globally include: APAC managing director Richard Brosgill was bumped up to APAC CEO, while MENA managing director Faisal Dean also got CEO stripes; Havas Media Group and Brainlabs veteran Matt Adams was hired to be CEO in Europe.

Direct quote

“Modern politicians are quite frankly, uninformed. They have demonstrated time and again in congressional hearings they have no clue how modern technology, apps, or social media function all the way down to its most basic level (“can TikTok control my wifi”). We have outdated minds making modern laws, and something is going to go wrong, which never benefits the brands. I think reform is a good thing, as long as it is done by people who can fully comprehend the reform they are putting forth.”

— Ian Clark, media director at independent Exverus Media, on the shape and direction of privacy laws.

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